How can Better Risk Management Help Counter Possible Threats in the Supply Chain Process?
Today, businesses operate in an increasingly complex environment with high risks of supply chain disruptions. These disruptions can disturb the normal flow of goods and materials in a supply chain and can have major negative consequences for business operations. Although there can be varied reasons for these supply disruptions such as strikes and labor disputes, […]READ MORE >>
Today, businesses operate in an increasingly complex environment with high risks of supply chain disruptions. These disruptions can disturb the normal flow of goods and materials in a supply chain and can have major negative consequences for business operations. Although there can be varied reasons for these supply disruptions such as strikes and labor disputes, inventory problems, and incorrect forecasts, they can hamper the productivity of the company. The more frequently these disruptions occur, the more negative the impact on the financial performance of the company. This necessitates companies to mitigate supply chain risks and have an effective risk management process in place. But before we get into the risk management process, let’s understand more about risk management:
What is risk management?
Risk management is a process that involves the identification of opportunities and threats that might occur in the business. It is a critical and continuous process that requires companies to conduct risk analysis at regular intervals. Risk management helps businesses to follow risk management steps that can effectively counter the possible threats occurring in business processes.
Determining risk management strategies requires developing a clear understanding of business processes. To know how our team can help you address possible threats and mitigate risks by following accurate risk management steps, request a free proposal.
What are the steps in the risk management process?
Any risk management process can be planned and executed in a well-defined manner with the help of the following risk management steps:
Step 1: Identify the risks
The identification of risks is the elementary step of any risk management process. Organizations can further categorize risks into four categories i.e., hazard risks, operational risks, financial risks, and strategic risks. These risks can be identified through experience and internal history or organizations can even choose to take the help of industry experts and external research companies.
Step 2: Analyze the impact
Organizations should know the probable risks and the impact they can create on their businesses. They should be able to measure the intensity of risks to know if the risks occurring will have a significant impact or not. Having a detailed knowledge of risks can help businesses to proactively devise a risk assessment plan and prioritize their resources accordingly.
Step 3: Implement risk mitigation strategies
Once the risks are sorted, organizations should be able to come up with a risk management plan that can address those risks. Risks should only be tolerated if they have zero or low impact in the business process. Otherwise, companies should devise a proper risk management framework and ‘treat’ those risks. Companies can choose any course of action that will help reduce the risk to an acceptable level for the organization.
Step 4: Review the situation
Since risk management is a process and not a project that can be finished and forgotten, it becomes essential to monitor potential risks. Businesses should know whether risk management steps taken by them are proving to effective or not. If not, they should start over with a new strategy.
Is the process of implementing risk management steps becoming too complex for you? Don’t worry! Request a free demo and know how our risk management solutions can help.LESS >>